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Paul Davis, P3s and the democratic deficit

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Premier Davis is hell-bent on getting P3 (public-private partnership) contracts signed to build long-term care facilities before the provincial election in November.

In April he announced his intention to go the P3 route, however it is only now we are hearing that the Conservatives are ready to sign these risky deals in October, prior to the election.

What this means is no matter who wins the provincial election in November, the people of Newfoundland and Labrador will be bound to a risky deal for 25 years. Where is the transparency and accountability that is our right?

How desperate and irresponsible is this government that it would ram this through in the dying days of its mandate, especially when it was never part of the party platform? This is not leadership, this is a con. All the polls show that the Conservatives have lost the trust and respect of the electorate. The voters know that P3s are bad news for everyone except the private contractors and their entourage of lawyers, consultants and negotiators.

Quite frankly, the evidence is so overwhelming that it is astonishing that governments are still falling for the spurious arguments in favour of P3s.

They cost more — much more

It is hard to uncover the facts about P3 contracts because there is no legislative framework that compels disclosure. Unions and others who try are either stonewalled, or faced with heavily ‘redacted’ documents with all the figures and other relevant data blacked out. It is often not even possible to obtain the calls for proposals without proof that you are a bone fide proponent. This cloaking is unacceptable in a democratic society where public money and government personnel are involved, and where we will be on the hook if the project fails.

For details on P3s we have to rely on the only people who can force the details out of governments and their private partners — the federal and provincial auditors general.

Their evidence is compelling.

In Ontario, Auditor General Bonnie Lysyk revealed that 74 public-private partnership projects had cost $8 billion (that’s billion, not million) more than they would have cost if they had been procured publicly, pointing out that each Ontario family was unnecessarily paying $1,500. In 2008, Lysyk found that the Brampton Civic Hospital cost $200 million extra, and that the P3 had included overly expensive financing and construction costs. Even worse, the P3 contract included privatised services—maintenance, laundry, etc.—in a 25 year contract.

In B.C. the auditor general found that the interest rate on $2.3 billion P3 debts in the province averaged 7.5 per cent while in the same period the government had a weighted average interest rate on its tax supported debt of 4 per cent. Governments everywhere can borrow at much lower rates than any private entity. So why borrow in the most expensive way possible through P3 arrangements?

Perhaps the most startling example of what can go wrong was the mess around the proposed P3 project to replace the coal-fired Lakeview Generating Station, which ended, after five rancorous years, with the cancellation of the Mississauga and Oakville P3 projects at a cost to the province of Ontario of $1.3 billion and the disgrace of the Dalton McGuinty Government.

The story is the same worldwide. The London subway Metronet cost $51 billion and failed. In France the government has been forced to buy back failed P3 projects.

Nor do P3 projects provide better service. Where the services are being delivered by a private contractor, profit comes first — so they often cut labour costs by laying off workers, using non-unionised workers and cutting wages and benefits. For example, the private corporation in the Hamilton-Wentworth water and sewage system laid off half the staff, reducing the operating budget by close to 40 per cent. The result was a catastrophic reduction in service quality.

Non-unionised workers have also been used in cases involving school construction and maintenance, highway construction and water treatment.

P3s are about profit, not care

The worst cases occur when a P3 project affects health provision, childcare and caring facilities. P3s are about profit, not care. It is hard to extract profit from caring for the sick and vulnerable, and impossible without lowering the level of care.

Premier Davis and his team intend to experiment with the risky business of P3 projects in exactly that area. They are planning their very first P3 to develop a long-term care facility, so that the most vulnerable in our society become guinea pigs in this new and dangerous formula.

Several groups—unions especially—have already voiced their concerns, including NAPE, CUPE, the nurses’ union and the provincial New Democrats.

NAPE’s Jerry Earle points out that: “According to the RFP, the provincial government will enter into a 25 year agreement with the private provider. The private company will be responsible to design, build and operate the long term care facility for 25 years with guaranteed levels of income. At the end of the agreement, the people of this province will not own any assets. It’s like renting a home for 25 years as opposed to owning it at the end of a mortgage. It makes no sense.”

For sure, P3s are complex and few ordinary people will be able to figure them out; a situation made much worse by the secrecy and obfuscation that surrounds all such deals. But people can figure out that P3s are, at best, risky, and that Premier Davis has no mandate to inflict them on us without full explanation and public consultation. He must be held to account and prevented from acting in this undemocratic, high handed and dangerous way.

This article is part of an ongoing series produced by members of the Social Justice Cooperative Newfoundland and Labrador in collaboration with The Independent.

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